Sanral and Aveng JV at loggerheads over ‘terminated’ contract

This follows Aveng claims that the ASJV had lawfully terminated the contract following a force majeure event after civil unrest, commotion, protests and threats of harm resulted in the joint venture being denied access to the site and the ability to safely continue the execution of the project.

“Sanral completely disagrees that there were force majeure conditions on the ground. The reality is that, as long as South Africa is grappling with poverty, people will always demand to be prioritised when projects are implemented in their areas,” Macozoma said on the sidelines of a briefing on Sanral’s infrastructure projects in response to the Presidential Stimulus Package yesterday.

“But our experience in the Wild Coast shows it is possible for us to find each other with communities. If you went to the Wild Coast now, you would realise that people want the project to resume. People are actually shocked that the Aveng joint venture has opted to leave and want them back on the ground,” he said.

Macozoma said, in reality, there was a bit of unrest when people invaded the site, making demands when they presented a petition, but factually from the time that invasion happened, there was not a single incident where violence was reported.

However, Aveng chief executive Sean Flanagan said they had a number of sites where the so-called business forums or construction Mafia arrived and wanted them to get rid of their contractor and appoint a contractor aligned to them.

“If you don’t, they initially threaten violence, and then it moves from there.

“We have had people on contracts where on-site managers have been followed home and cut off by a vehicle in front and vehicle behind and told, ‘This is your last warning’.

“These are armed people. This isn’t just a little protest. This is serious threat to life. Our people have received SMSs and emails threatening their lives. This is not something we take lightly. We simply cannot put our people at risk.

“Our partners have said they have operated in 80 countries in the world and have never experienced anything like this, and that includes Afghanistan and Iraq,” he said.

The ASJV launched a pre-emptive urgent application in the North Gauteng High Court last week for an order preventing Sanral from making a call on the contract securities until the dispute between the parties regarding the termination of the contract had been finally determined.

This relates to a R245 million performance bond and R87.1m retention bond for the contract.

Flanagan said Sanral had also terminated the contract and that matter would go to a dispute arbitration board, whose decision was binding but not final.

Aveng this week reported a significant increase in its headline loss to R770m from R335m in December 2017.

Shares in Aveng dropped by 25 percent on the JSE on Tuesday to close at 3cents a share.